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Do Latest HALA Plans Penalize Developers for Density?

Earlier this week, the city released maps showing what the proposed upzones under the Housing Affordability and Livability Agenda (HALA) plan could look like. Dan Beekman at the Seattle Times has a good summary of the changes that could come to multifamily and commercial areas, which could see buildings that are one, two, or three stories higher than what’s currently allowed.

One aspect of the upzone proposal that hasn’t gotten much coverage, though, is a change that would require developers to build (or pay a fee in lieu of building) more affordable housing in new buildings in neighborhoods where upzones are greater; so that, for example, someone building in a Lowrise-2 area that used to be single-family, a substantial jump in zoning capacity, would have to provide more affordable housing or pay a larger fee than a developer building in an area that got just a one-story zoning jump. “When more value is given, there would be a larger affordable housing requirement associated with that,” Nick Welch, a senior planner at the Office of Planning and Community Development, explains.

The result is that developers who are adding substantial density to an area would pay a larger penalty for doing so. The exact percentages haven’t been worked out yet, but the percentage that has consistently been discussed for a “typical increase” in zoning capacity is between 5 and 7 percent, so anything above a “typical increase” would presumably be more than that. On the map above, and the three new designations–M, M1, and M2–identify increasingly large jumps in density.

The new three-tiered set of designations would be in addition to another aspect of HALA, which HAS gotten some coverage, that would discourage density in areas (like Southeast Seattle) where people are at a higher risk of economic and physical displacement.

It’s easy to see the city’s logic–that developers who take advantage of greater increases in density should pay more in exchange for the higher profits that come from taller buildings–but another conclusion might be that the higher affordable housing requirements will discourage building in the areas with the most capacity for future growth. If HALA makes a seven-story building possible in an area where only three stories are currently allowed, but requires developers to pay an extra penalty to build in that area, will developers just stay away? Given that our affordable housing crisis is largely a housing shortage, that seems like a question well worth asking.

It’s not a penalty… as long as it is implemented correctly. As I understood it, the concept is that developers are giving up some of their additional PROFIT in order to pay for or offset the affordable housing units in the project (ideally) or the additional fee they pay in lieu. So as long as the City doesn’t take away too much of the additional profit, the program should actually incentivize the developers to build in these areas. Of course, as you are well aware, the devil is in the details; and we will need folks like you to keep an eye on the City on that one.